DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
SOURCES 1
ANALYSIS 2
A new value proposition for investment in solar energy has emerged over the past decade as industrialists address a shifting set of strategy drivers in an increasingly buoyant environment. 2
The demand side of the international PV market can be clearly divided into four market sectors 2
On the supply side, manufacturing growth along the solar value chain has been dramatic by any standards 3
2008 saw further large increases in solar manufacturing capacity, diversification of manufacturing locations and shifts in leadership 4
With new companies and fresh markets wrestling for prominence, strong industry consolidation and vertical integration is expected 5
Component manufacturers, utilities, and regulators are making decisions now that will determine the scale, structure and performance of this nascent sector. 6
Solar manufacturers rather than established energy companies are exploiting opportunities presented by the fast-expanding market 6
European utilities have largely shunned the solar market 7
European utilities will quickly become the largest and one of the most important customers for the solar Industry 8
During the march to grid parity, the decisions of regulators will affect not only utilities but the entire solar sector 9
The horizontally-integrated model is best for utilities seeking to rapidly and significantly scale existing solar while diversifying into new solar technologies and markets. 9
For utilities, the horizontal integration of fixed-cost solar assets would be an unhedged yet comparatively safe business model 9
Solar will form part of utilities' horizontally integrated renewable operations, with upstream benefit but barriers downstream 11
India is emerging as an aspiring producer of solar technologies with the infrastructure to support utility-scale involvement 12
European utilities seeking to diversify into solar should turn their attention to Italy's well-segmented solar market 13
Due to the reduction in the Spanish cap, Germany is expected to reclaim the number one spot as the most mature solar market 14
Ask the analyst 15
Datamonitor consulting 15
Disclaimer 15
List of Figures
Figure 1: Rural applications of solar PV and large scale PV power production are driving the solar boom 2
Figure 2: FiTs provides investors with a planning horizon that allows new production capacity to be matched with expected demand 3
Figure 3: Regional and national shares of PV cell production and top 10 PV cell producers (2007) 4
Figure 4: The current solar industry trend - which became obvious in 2007 - is toward vertical integration 5
Figure 5: The extent and speed of this emerging sector's growth depends on many sets of players 6
Figure 6: Unlike most of their European counterparts, US utilities have embraced solar energy early on 7
Figure 7: Technology, market, regulatory, operational and financial drivers are encouraging utilities to take-up large scale solar generation strategies. 8
Figure 8: Solar makes for a safer unhedged horizontally integrated asset than convention generation 10
Figure 9: As the scaling of utility ownership of renewable energy grows, consolidation of solar portfolios will become commonplace as utilities seek to leverage scale and efficiencies 11
Figure 9: India's adoption of new FiTs for solar power coupled to support for solar PV manufacturing has put it on the map 12
Figure 11: Besides high sun irradiation, Italy offers an attractive premium FiT 13
Figure 12: The highest potential for utility-scale involvement is (and will continue to be) found in Germany 14